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Gbf Ch 1-2/13 Angl.Exe 28/04/99 7:15 Page 3 GbF Ch 1-2/13 Angl.exe 28/04/99 7:15 Page 3 I. Group profile 2 RENAULT PAST AND PRESENT In 1998, Renault recorded worldwide sales in excess of 2.2 From the first small car created by Louis Renault in 1898 to million vehicles and generated revenues of FRF 244 billion, of the latest arrival, the Clio II, Renault has been the source of which 61.4% outside France and 16% outside Europe. On many ground-breaking concepts in automotive history: the 4 December 31, 1998 the Renault Group had a combined work- CV in 1946; the Renault 4 — the first small front-wheel drive force of 138,321. car — in 1961; the Renault 16, with its hatch back and modular interior, in 1965; the Renault 5 with its polyester bumpers in BACKGROUND 1972; turbo-powered vehicles starting in 1980; the Espace in 1984; the Twingo in 1993; and the Mégane Scenic in 1996 are Over one hundred years ago — in 1898 — Louis Renault produ- just some of the models that have contributed to the com- ced the first "Type A". The same year, he formed "Société pany's tradition of innovation. In 1998 Renault exhibited Vel Renault Frères" to manufacture motor vehicles, taking Satis, a concept car that reveals the spirit of the brand's advantage of patents such as the first direct-drive transmis- forthcoming top-of-the-range models. sion. Based in the Paris suburb of Billancourt, the company achieved international renown through its success in motor STRUCTURE sports, and initially specialized in the construction of passen- OF THE RENAULT GROUP ger cars and taxis. During the First World War, it produced substantial volumes of trucks, light tanks and aircraft Renault is the parent company of the Renault Group and the engines. principal operating entity for passenger car and light com- mercial vehicle businesses in France. The Group's activities In 1922, having expanded strongly in the passenger car and are organized into three divisions: commercial vehicle markets, Renault became a limited com- pany. Establishing production centers in France and abroad, – The Automobile Division (80% of revenues, i.e. FRF 195 bil- Renault gradually emerged as the French market leader. lion in 1998) is responsible for designing, manufacturing and marketing passenger cars and light commercial vehicles; it In January 1945 the company was nationalized as "Régie also handles related activities such as agricultural machinery Nationale des Usines Renault" and concentrated on produ- cing the 4 CV – The Commercial Vehicles Division (17% of revenues, i.e. FRF 41 billion in 1998) pursues the same activities in the field of Through to the mid 1980s, Renault followed a strategy of commercial vehicles (trucks, coaches, buses, military and diversification in the industrial, financial and service sectors, special-purpose vehicles). while at the same time growing its industrial and commercial activities internationally. The Renault 5, which remains one – The Finance Division (3% of revenues, i.e. FRF 8 billion in of the Group's greatest commercial successes, was launched 1998) is a complementary division with financial and com- in 1972. But in 1984, the company ran into financial difficul- mercial businesses, bringing together the subsidiaries res- ties. As a result, it concentrated on restructuring and refocu- ponsible for sales financing and services; it is also respon- sing on core activities, and returned to profit in 1987. sible for managing the Group's cash funds. In 1990, Renault became a limited company once again. In RENAULT'S STRATEGY the same year, it signed an agreement for close cooperation with the Volvo group. And in 1991 the two groups linked their Renault pursues a Group-wide strategy based on seven strategic automobile and commercial vehicle businesses via cross- goals: shareholdings. This arrangement was unwound in 1994 after – Achieve complete customer satisfaction through the quality plans to merge the two groups were shelved in late 1993. and reliability of our products and services. – Become the most competitive manufacturer in Europe. One year later, the French government opened Renault to – Offer a young, strong and innovative product range. outside capital, a first step towards privatization, which took – Accelerate Renault's international development. place in July 1996. – Develop a coherent and open Group. – Work more effectively together. GbF Ch 1-2/13 Angl.exe 28/04/99 7:15 Page 4 3 – Generate profits to meet shareholders' expectations and finance our growth. These goals, which were reviewed in December 1998, are the foundations that underpin Renault's strategy of profitable growth. This strategy is based on three priorities: – developing a brand identity focusing on innovation in pro- ducts and services for complete customer satisfaction; – becoming the most competitive manufacturer on our mar- kets in terms of quality, costs and delivery times; – expanding our international scope to play a central role in automotive development throughout the world. Principal consolidated data, 1989-1998 Financial data in Notes 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 FRF million Revenues (1) 174,477 163,620 165,974 179,449 (2) (7) 171,502 184,252 169,789 178,537 184,065 184,078 207,912 243,934 Operating margin (8) (1,572) 3,694 12,595 Operating income (loss) (1) 12,944 6,299 4,663 7,920 (3) 4,813 7,734 609 2,317 1,259 (5,987) 2,030 10,839 Pre-tax income (loss) (4) 9,725 1,380 4,109 6,313 (5) 3,969 6,481 1,094 3,485 1,976 (5,645) 4,095 11,145 Renault net income (loss) 9,289 1,210 3,078 5,680 1,071 3,636 2,139 (5,248) 5,427 8,847 Cash flow (1) 15,050 7,919 10,113 13,149 (2) 12,305 16,117 11,017 12,145 11,669 6,918 13,804 20,321 Investment (1) 10,361 13,213 21,554 11,685 (2) 20,637 13,565 12,043 16,050 15,499 17,046 16,289 14,902 Net indebtedness 17,593 27,110 15,528 12,549 of industrial and commercial activities (6) 8,727 7,851 (1,458) 3,368 9,385 2,097 (12,650) Shareholders' equity 22,466 17,014 31,331 33,965 33,877 42,784 43,796 37,770 43,917 51,562 Total workforce (no. of persons) (2) 174,573 157,378 147,185 146,604 139,733 138,279 139,950 140,905 141,315 138,321 Note: For the sake of consistency, commencing from the presentation of the 1993 accounts, Renault has (5) fully consolidated financial subsidiaries - share in income in companies accounted for by the equity adopted revised standards published by the International Accounting Standards Committee (IASC) and has method is recorded after taxes modified the principles used to record deferred taxation. In particular, since 1993 Renault has fully consolida- (6) new definition ted its financial subsidiaries. To allow different years to be compared effectively, Renault has prepared pro- (7) for comparison with 1997 and 1998 figures, see page 14 forma financial statements for 1991 and 1992. (8) operating margin: the notion of "operating margin" is introduced into the financial statements as of (1) excl. financial subsidiaries January 1, 1998. Operating margin corresponds to operating income before "other operating income and (2) incl. financial subsidiaries expenses" (3) incl. financial subsidiaries - new definition encompassing income and expenses previously recorded as exceptional items (4) financial companies accounted for by the equity method - share in income in companies accounted for by the equity method is recorded after taxes GbF Ch 1-2/13 Angl.exe 28/04/99 7:15 Page 5 4 Principal data in millions of French francs and euros Financial data 1996 1997 1998 FRF EUR FRF EUR FRF EUR Revenues 184,078 28,063 207,912 31,696 243,934 37,187 Operating margin (1,572) (240) 3,694 563 12,595 1,920 Operating income (loss) (5,987) (913) 2,030 309 10,839 1,652 Pre-tax income (loss) (5,645) (861) 4,095 624 11,145 1,699 Group net income (loss) (5,266) (803) 5,438 829 8,770 1,337 Renault net income (loss) (5,248) (800) 5,427 827 8,847 1,349 Earnings per share(1) (22.07) (3.36) 22.79 3.47 36.98 5.64 Share capital 5,995 914 5,995 914 5,995 914 Shareholders' equity 37,770 5,758 43,917 6,695 51,562 7,861 Total assets 217,640 33,179 230,121 35,082 250,086 38,125 Dividends(1) 0 0 3.5 0.53 5.00 0.76225 Cash flow 6,918 1,055 13,804 2,104 20,321 3,098 Investment 17,046 2,599 16,289 2,483 14,902 2,272 Net indebtedness of industrial and commercial activities 9,385 1,431 2,097 319 (12,650) (1,929) (1) in FRF and EUR. Exposure to Currency Risk In 1998, Renault made 70% of revenues in euro-zone coun- tries, of which 31% outside France. For this reason, the impact of currency fluctuations on revenues and earnings was limited chiefly to movements of the pound sterling and the US dollar. The currencies of the countries participating in Economic and Monetary Union converged during the course of 1998 ahead of the advent of the euro in January 1999. GbF Ch 1-2/13 Angl.exe 28/04/99 7:15 Page 6 OWNERSHIP STRUCTURE AND STOCKMARKET PERFORMANCE 5 PRINCIPAL SHAREHOLDERS On November 21, 1994 the protocol shareholders signed an agreement whereby they retained their entire stake for three On December 31, 1998 the French state held 44.22% of months and 80% of the stake for the subsequent 21 months.
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